Why the Euro failed
qz.com
qz.com
The UK can devalue its currency every time it needs a GDP growth spurt.
Just like Italy used to do.
Germany and Benelux are high but problematic in areas of consumption. 41% of the German Economy is export orientated (meaning consumption is extremely low) and while employment rates are high, employment isn't completely 'full time', wages lag productivity significantly (pay is relatively bad) and debts in the private sector are heavily problematic. Not to mention Germany's population demographics don't have a bright future.
Contrast this to economies with their own currencies - the UK, Sweden, Norway, Poland, Denmark - which aren't dogged down by such problems. Sweden had a housing crash last year and is managing just fine despite it.
If the EZ had another crash it would be debatable whether it can still hold strong - a point reinforced by France's Finance Minister himself.
If you look up GDP it is pretty big, but if you look up wages you will find its relatively bad.
But don't over exaggerate, we are just about to see the story when one tries to play on their own without the EU. I think it's going to be the first true example of "what happens"
It's very distracting to keep looking at the UK and Brexit and forget that others on the continent clearly do better without the Euro. There are still countries in the Eu with EZ opt outs.
I'd also like to point out Switzerland is not in the Euro and not in the EU and its metrics are far better on everything - although it is in Schengen.
For some people in Europe the Euro was a bit like when decimalisation happened in the UK - suddenly everything in every shop was marked up to be that bit more expensive. But people got over that, much like how people got over decimalisation in the UK, nobody wishes for 'pounds, shillings and pence' any more.
Trade is so much easier in Europe without the funny little currencies that there used to be. You don't get fleeced by people exchanging money from Lira to Francs to Deutschmarks to Irish Pounds and so forth. This helps the little guy as well as normal sized businesses.
In the pre-Euro days it was a regular thing to read stories about how places like Italy had shaved a few zeroes off their Lira due to hyperinflation. We don't have those stories now. I think the Euro has something to do with that. At least everyone in Europe has a currency that is worth something, before then half the European currencies were as useful as Monopoly money or crypto-ponzi-tokens.
There was also a lot of speculation on currencies in the pre-Euro days. Effectively 'pump and dump' schemes, some capitalist fat cats would get bored and pick on a currency to destroy. The only way to control this is to have restrictions on how much money people could travel with, so in pre-Euro days you might find yourself off on holiday to Greece or somewhere and not be able to take much more than pocket money with you.
History is generally written by people with an agenda who don't specifically lie to make their point (sell more books), instead they lie by omission. The Euro was not some dastardly neo-liberal scheme to economically colonise places like Greece and make things difficult for the German taxpayer. Saying so in fake academic b.s.-speak does not make it so. Europe has difficulties with things like Brexit, there is no need for reject 'scholars' from the IMF who aren't even European to stir people up into nationalistic fervour.
What next? An 'academic' who knows nothing about America could sell books on how the dollar has been a failed experiment and how the U.S. needs to have separate currencies per state. Sounds great, don't see why those nice folks in California should be bailing out those dossers in Detroit, right?
How well would business work inside the U.S. if you needed to change your New Mexico Pesos into Arizonan Pobble Beads each time you ventured out from Albuquerque for a day trip to the Grand Canyon? What if you only had Wyoming Whuffies and the stall at the inter-state border took 10% commission and claimed they only exchanged at a fraction of what you bought them for the day before?
That would make no sense at all, neither would it make any sense to have the Eurozone broken up into lots of currencies that can be played by the stock markets of London and New York for speculative gain.
>We don't have those stories now. I think the Euro has something to do with that.
Yes, but it's not like Italian budget magically turned to proficit because of euro adoption. It still contains deficit, the one which EU is not happy about, and they are currently fighting with Italy. Maybe if lira was still italian currency, Italy devalued it a bit and that would be the end of the story.
Instead, there is a eurozone-wide problem of how to deal with populist italian government, and the cost of this problem is... €2.1 trillion (that's the amount of italian debt).
So, the problem was not resolved. It just was shifted into the future, with unclear implications.
Devaluation won't fix Italy's problems in the long term, it just shifts them into the future. The devaluations of the lira in the last ~30 years of the last century and the flattening economic growth in the '90s are there to prove it. You cannot keep drugging your economy forever, you'll pay for it in the end.